GKN goes Dutch on £500m aerospace acquisition
MIDLANDS industrial group GKN has strengthened its presence in the European aerospace sector with the £500m acquisition of Fokker Technologies Group.
Fokker, one of the most historic names in European aviation, dating back to the early days of powered flight, has been sold by Arle Capital for €706m. Fokker is a specialist tier one aerospace supplier in aerostructures, electrical wiring systems, landing gear and associated services, across commercial, military and business jet end markets. Its headquarters are in the Netherlands.
Redditch-based GKN said the transaction was an excellent fit for the group, reinforcing its aerospace division’s global leadership position. It means the group becomes the number two supplier in aerostructures and third in electrical wiring systems.
The deal also extends the group’s global footprint with a presence in China, Turkey, India and Mexico. It will also expand the group’s technology and product capabilities and strengthen its OEM relationships.
Nigel Stein, Chief Executive, GKN, said: “Fokker is an excellent strategic and cultural fit which supports our growth strategy. It strengthens GKN Aerospace’s market leadership, manufacturing footprint and technology.
“This transaction will increase our shipset value on key growth programmes in both the commercial and military markets including Fokker’s complementary positions on the A350 and the F-35. Fokker’s sizable China operations also help boost GKN Aerospace’s activity in this important region.
“Fokker is a great business with a strong brand and has significant technology heritage. We believe that it will benefit from GKN’s operational focus and long-term approach. I look forward to welcoming the Fokker workforce to GKN.”
GKN, which has launched a £200m share issue to part fund the acquisition, said Fokker was expected to deliver 8.4x on 2015 EBITDA and the acquisition would be earnings per share accretive in the first full year.
The deal announcement comes as the latest GKN interims show the group saw a 1% increase in first half sales on a management basis to £3,853m (2014: ££,828m). Pre-tax profit rose 4% on the same basis to £307m (2014: £296m).
The group benefits from the ongoing strength of the global automotive sector and while its civil aerospace business grew, this was offset by a decline in the military sector. The company’s Land Systems division also struggled, largely due to the decline in the agricultural sector.
Stein said: “This was another solid performance, particularly in our automotive businesses, with GKN Driveline delivering 4% organic sales growth and an 8.3% trading margin while GKN Powder Metallurgy achieved an 11.8% margin. GKN Aerospace delivered in line with expectations and won some important new contracts for the future.
“We have continued to perform well against our key markets and report good results in spite of some end market weakness, particularly in GKN Land Systems. We expect these trends to continue in the second half and for 2015 to be another year of growth.”
The group has also announced a change in board responsibilities in anticipation of Andrew Reynolds Smith’s resignation.
With effect from September 25, responsibility for GKN’s Driveline business will be assumed by Phil Swash (currently responsible for GKN’s Land Systems division). On the same date, Adam Walker, Group Finance Director, will assume responsibility for GKN Land Systems in addition to his current role.
Swash joined GKN Aerospace from Airbus in 2007 as CEO Aerostructures Europe and was appointed Chief Executive Land Systems in January 2014. He will remain a member of the GKN Executive Committee together with Kevin Cummings, Chief Executive GKN Aerospace, and Peter Oberparleiter, Chief Executive Powder Metallurgy. All will report directly to Nigel Stein.
